Lower Tax Rates
Medical Professionals are in the highest income tax bracket, paying over 53% marginal tax rate in Ontario. By incorporating your medical business you can manage and defer taxes for a lower corporate tax rate of 13.5%
Tax Free Dividends
Annually, you could receive up to 50,000 a year worth of tax free dividends from your corporation.
All loans for shareholders must be returned by the end of the following fiscal year. So if you were to take a loan in January 2018 and the year end of the corporation is December 2018 then the loan must be returned by December of 2019. This can be adjusted and repaid via dividends, bonus or salary.
By utilizing proper record keeping, your corporation can be used to purchase automobiles. It is common for corporations to provide vehicles for the use of the corporation’s directors. Mileage logs must be maintained and the distance from the place of residence and primary place of work is not deductible. Every situation has to be assessed.
Executive Life Insurance
Perhaps one of the great benefits of incorporating is also paying a life insurance policy from the corporation directly. This avoids tax triggers on the personal side since the marginal tax rate on personal is up to 53% in Ontario vs 13.5% in Ontario.
Money left in the corporation can be used in years when there are life changes like pregnancy, travel, etc. Also the tax can be deferred to retirement years so the marginal tax rates remain low over the life of the corporation versus paying it immediately at very high marginal rates.
Looking for finance and accounting help? Dean and Associates Accounting has over 14 years of experience working with Medical Professionals, Small Business Owners, and Non for Profit Organizations.
Cost of Incorporating
These are typically one time for registering a Corporation in the province and get approval from the medical bodies.